US Target faces an identity crisis

The third largest retailer in the United States was once high flying, but now it's struggling to find its place in the minds of American shoppers.

Once known for its cheap chic fashions and home accessories, Target faces competition from trendy chains like H&M.

The discounter also hasn't been able to ditch the image that its prices on staples like milk are higher than rivals like Wal-Mart.

And it's battling the fallout from a massive data breach that has hurt its reputation.

Meanwhile, Target this week fired the president of its Canadian operations following some missteps in that country.

The ousting comes two weeks after the Minneapolis-based discounter announced it was looking for a new leader after the abrupt departure of its CEO.

All of Target's challenges come as the broader retail industry is dealing with a slow economic recovery that hasn't benefited all Americans equally and a move by shoppers away from buying in stores and toward shopping online.

As a result, Target reported its first annual profit decline in its latest fiscal year in five years.

Target's first quarter results, which are slated to be released later this month, will offer more insight. And its shares have fallen 10.5 per cent this year.

"The nature of the retail landscape has changed," said Brian Yarbrough, a consumer products analyst at Edward Jones.

"I don't think Target has addressed the changes well."

There are four big issues the company is facing.

Target was the first low-price retailer to team with designers to create affordable lines when it forged a partnership with Michael Graves in the late 1990s.

But that niche has been copied by traditional stores and foreign imports like H&M.

Analysts say Target took its eye off the ball on its trendy offerings when it focused on expanding its food business since the recession.

Target says it's moving more quickly to test the latest items in stores. It also made some personnel changes aimed at making it more nimble.

Another problem is price.

Since the economic downturn, Target has battled the perception among tight fisted shoppers that its prices are too high when compared with rivals.

That challenge only increased as Wal-Mart, the world's largest retailer, has pushed its lower prices even more lately.

In response, Target has been pushing the "Pay less" part of its advertising slogan "Expect More, Pay Less."

Last year, it touted prices on products in holiday TV ads, the first time it had done so in at least a decade.

The third challenge is technology.

Target's data breach late last year, which compromised the credit card and other personal information of millions of customers, exposed big flaws in its security system.

The company is overhauling some of its divisions that handle security and technology.

It's also been accelerating its $US100 million plan to roll out the more secure chip-based credit card technology in all of its nearly 1,800 stores.

Lastly, Target's expansion into Canada with more than 100 stores last year has been fraught with problems.

Shoppers have complained that prices are too high, and the stores have been wrestling with inventory problems.

As a result, the company's sales in the country were weak and it recorded a nearly billion loss for the latest year.

Target has replaced Tony Fisher, the president of its troubled Canadian operations, with a 15 year US company veteran.

Mark Schindele, 45, who was senior vice president of merchandising operations, will now run the Canadian operation, effective immediately.